Nevada regulators end rooftop solar incentives

OREANDA-NEWS. December 24, 2015.  The Nevada Public Utilities Commission (PUC) voted today to end subsidies for residential solar systems, which solar developers said could jeopardize their future operations in the state.

The PUC, in a 3-0 vote, accepted a proposal from commissioner David Noble to effectively end most net metering benefits for rooftop solar systems in the state.

The proposal was based on a complaint filed by NV Energy, a Berkshire Hathaway subsidiary, in July. It argued that the benefits for the state's net metered systems turned into rate increases for other ratepayers.

The previous net metering arrangement in the state was found to have credited owners of rooftop solar installations with \\$471-632/yr, according to the PUC's findings. The net metering policy had reimbursed electricity customers that send power back to the grid based on their residential retail power price, which is currently about 11.487?/kWh for a single-family residence, according to an NV Energy rate card.

Under the new PUC policy each excess kilowatt-hour of electricity put onto the grid will be compensated at the same price NV Energy would pay in the wholesale power market. Forward wholesale peak power prices at the neighboring Palo Verde power node were \\$24.45-30.65/MWh (2.445-3.065?/kWh) for calendar years 2016-2019 yesterday in Argus' forward curves.

NV Energy has not yet commented on the decision.

The new rates will be implemented gradually over the next four years, and will apply to all existing net metered customers in the state, along with future systems.

The PUC's decision to accept the proposal means net metered generation for residential and small commercial systems will now be compensated at NV Energy's discounted wholesale price, rather than the retail price. NV Energy can determine an interconnection fee for net metered systems in future rate proceedings, which will compensate the utility for maintenance and upgrades to the grid, according to the proposal.

The proposal was largely opposed by residential solar developers, including SolarCity, Vivint Solar and SunRun. By voting to approve the proposal, new residential installations in the state are almost sure to drop, as developers say that favorable margins would disappear.

Developers will likely sue to try to overturn the decision, said Sunrun senior vice president for public policy and head of the The Alliance for Solar Choice (TASC) Bryan Miller. "We believe the commission's decision flies in the face of Nevada law," Miller said. "In a similar situation in Wisconsin, the commission acted without evidence and attempted to eliminate the solar industry. TASC sued and TASC won, and TASC expects to do the same here."

"The PUC proposal will force SolarCity to cease sales and installation operations in Nevada," SolarCity chief executive Lyndon Rive said.

The ruling could be a bellwether for other states contemplating adjustments to their net metering policies, particularly given newfound certainty in federal investment tax credits for residential systems, which have been extended through 2022.

"Following the latest news today in Nevada of a proposed order to reduce net metering compensation, we emphasize our growing focus on state-level reform of net metering outside of traditionally friendly solar jurisdictions," UBS analysts said in a research note. "While we had previously thought state regulators would wait until after the year-end 2016 expiration of the tax credit prior to reducing compensation, the [credit] extension provides a green light for states to begin reducing state-specific net metering compensation."